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Kickstarting Innovation in the
Philippine Venture Capital Industry

November 23, 2020

  •   5 min read

“We have a front row view of problems endemic to emerging economies […] these create opportunities for startups to offer innovative solutions."

MINETTE NAVARETE
President
Kickstart Ventures, Inc.


Minette is Vice-Chairman and President of Kickstart Ventures, Inc. She is a member of the Ayala Corporation’s Innovation Advisory Council, and of Globe’s Innovation Advisory Board. She is a Senior Vice President at Globe Telecom, focusing on New Business, and a member of the Board of Directors of AdSpark, Globe’s digital advertising subsidiary. Minette has held CEO/COO positions in various industries, ranging from scrappy Philippine startups to iconic global companies.

THE INTERVIEW

What is your view on the current state of the
Philippine startup industry?

The Philippine startup industry is still in early-stage innovation: generally, more tech startups than scaleups. But we are also optimistic: Today, there are more local investment funds set up by local conglomerates and corporations that local startups can approach for funding. We also noticed an uptick in the presence of foreign investors pre-lockdown while local incubators / accelerators are increasingly reaching out to Kickstart in their capacity as “institutional feeders” into the Kickstart deal pipeline. Likewise, there is increased engagement and information exchange between the startup community and government policymakers.

However, the ongoing Covid-19 crisis has shifted the conversation in the startup community from “fast-growth” to “survival.” It’s a changed world — some companies will thrive, some will be hard-hit by lockdowns. Across the room, VCs are focusing more on companies whose value propositions are considered immune to trends and disasters and backed by strong fundamentals.

What are the changes in the VC landscape that Kickstart has seen through the years?

When we started in March 2012, there were only a handful of angel investors and institutional investors funding digital tech startups. The launch of the Venture Capital and Private Equity Association (VCAP) in early 2019 is a hopeful sign — that finally, there is a critical mass of VCs and PEs with real investment interests and activities with the local startup community. In the last two years, Kickstart also saw a rise in overseas-based VCs and corporate entities requesting intros to or investing in local startups or co-investing with locally-based VCs.

How do you see the startup industry changing in the next few years?

Greater engagement from established corporates for startups – whether as investors, collaborators, or customers. We also see continued improvement in the quality of local startups in terms of scalability and “investability”. Some contributing factors include: founders moving on to their second and third ventures, former startup employees continuing to work for other startups or creating their own, and more successful founders proving to be points of inspiration.

The Covid-19 pandemic is changing the way VCs and startups operate. For Kickstart, the crisis has peeled away the “fluffy” deals — there is a sharper focus on deals addressing deeply felt problems with real customers. For startups, a strong product must rest on leaders with good fiscal discipline: managed burn rates, a healthy cash flow, and a shorter path to revenues.

 

What is the most exciting thing about running a VC firm in the country?

The upside of being a VC based in the Philippines: we have a front row view of problems endemic to emerging economies. And for us, these problems unique to emerging economies create opportunities for startups: offer innovative solutions that we can find, invest in, and help scale across other emerging economies.

Operating in an emerging economy that has the 2nd largest population in Southeast Asia (next to Indonesia) gives us proximity to overseas-based startups and talent looking at the Philippines as an ideal testbed for their products: we have the problems and large pool of users but without the language barrier. Lastly, it is exciting to be a CVC based in the Philippines because we have a large addressable market that has one of the highest digital adoption rates globally.

What are the challenges of operating a VC firm in the Philippines?

Historically, the Philippines is not top-of-mind in the Southeast Asia VC corridor. We attribute it to a few exits and the occasional news on large-sized investment rounds. The occasional “good news” is reflective of a young and still growing startup ecosystem whose enablers are yet to create an environment ideal for startups to thrive. Because we operate in an early-stage innovation environment, Kickstart embraced the role of an ‘atypical VC’: for us, funding goes hand-in-hand with portfolio development for our startups to have a real shot at success, as well as startup ecosystem building to accelerate investing momentum and innovation outcomes.

Which sectors/industries are you prioritizing for startup investments?

With the Ayala ACTIVE Fund, we are focusing on future outcomes that we believe in, more than on specific solutions or technology, where our capital and operating muscle can strengthen startup innovation. With that said, we are seeing promise and relevance in sectors such as Digital Content & Media, Cloud-based Productivity & Collaboration Tools, AI-powered Planning and Analytics Platforms, Payments, Commerce & Logistics Platforms, Digital Healthcare and Education, Smart Devices and Space Management, Innovative Leasing Business Models, and Mobility Solutions, among several others.

Kickstart Ventures is a Corporate Venture Capital firm and a wholly-owned subsidiary of Globe Telecom. Kickstart seeks and invests in early to early-growth stage startups. Today, the firm manages USD 60 million across 2 funds for Globe: 45 investments across 8 countries – 30 of which started in the Philippines. – making them the most active CVC in the country, with an expanding international footprint. Kickstart also serves as Advisor to the Ayala Corporation Technology Innovation Venture (ACTIVE) Fund, a $180M corporate venture capital established by AC Ventures together with various Ayala group business units.

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